The government’s crackdown on foreign-owned property in the UK has been brought forward after the business minister unveiled new plans in the wake of the furore surrounding the high-value London homes owned by the Russian elite.
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Of the roughly 97,000 UK properties currently owned by foreign-registered firms, around £33.9bn worth is based in London, and an estimated £1.1bn of that is owned by prominent Russian figures who have ties to Putin and his regime. This statistic has come to light in the wake of the recent Salisbury poisoning, which has been attributed to the Kremlin by Theresa May, and the government has now announced that new draft laws will be set out as early as the start of the next parliamentary session.
The new laws will mean foreign companies must be transparent about who ultimately owns their properties – and the frontmen of those companies who fail to comply could face up to two years in jail and unlimited fines. It will target all foreign-owned property, not just that owned by Russian investors, as part of the global fight against corruption and preventing laundered money from being “hidden” in the UK’s real estate market.
Theresa May’s proposed anti-corruption measures came under added pressure earlier this year after it emerged that a huge amount of UK properties were owned by companies that were based in the British Virgin Islands, which sparked major concerns around tax avoidance and saw the prime minister promise to bring in a compulsory register in 2021.
Seize their assets
Last month, the country’s first “unexplained wealth order” (UWO) was served against an Asian politician who owned £22m worth of property in London. The new UWOs are to be employed to investigate the origins of money used to purchase all UK properties where financial sources are unclear, and Liberal Democrat leader Vince Cable has called for more UWOs to be deployed to add pressure.
Cable added: “The prime minister must demand these [Russian] oligarchs, who surely must be considered politically exposed persons, explain in writing, with detailed documentation, just how they obtained their fortunes.
“If the answers are not forthcoming or are unsatisfactory, then authorities must seize their assets as a matter of urgency.”
Of course, only a minority of foreign-owned properties will have been acquired through corrupt or untraceable funds, but those that have will be seized under the new rules. This is likely to act as a major deterrent to future purchases of top-end property in London by such overseas investors, which could have a major impact on this sector of the property market in the future – potentially improving pricing and availability for UK-based buyers.